The Bank of England is expected to keep interest rates unchanged this week despite mounting concerns that cuts are needed to prevent the credit crunch damaging the economy.

Members of the Bank’s Monetary Policy Commit­tee are predicted to announce on Thursday that its key cost of

borrowing will stay at 5.75 per cent.

In a survey of 37 economists by Thomson Financial, all predicted that rates — at their highest level for six years after five rises since August 2006 —would be left unchanged this month.

But 25 expect rates to come down by the spring, including seven who think the next cut could come as early as November and six who think rates will be cut twice before the end of March to 5.25 per cent.

That marks a dramatic change from earlier in the year when the consensus was that rates would continue to creep up in 2007 and early 2008.

This view was shattered by the summer turmoil on international financial markets and last month’s crisis at Northern

Rock.

Ernst & Young’s influential economic research group Item Club yesterday called for the MPC to cut rates this week.

Its economic adviser Adrian Cooper said concerns that further rises were needed to keep inflation under control had been overshadowed by the threat of crisis in the credit markets.

He added: “A cut would show that the Bank of England is at last responding with appropriate vigour to the risks to UK growth and consumer confidence.

“However, one rate cut is unlikely by itself to be sufficient to prevent a significant slowdown in growth next year to well below trend.”

Howard Archer, chief UK economist at Global Insight, said rate rises were now off the agenda.

He said while there was still a threat to inflation from higher oil and food prices he believed the Bank would remain in “wait and see” mode until the new year.

David Kern, economic adviser to the British Cham­bers of Commerce, said tightening credit conditions were alarming and added: “If the MPC does not cut rates this week, it should definitely cut in November.”